Applied Rationality focuses on public policy issues and tries to take a liberal perspective that is consistent (comments to the posts will often show otherwise) with neoclassical, rational-choice economics.

Wednesday, March 23, 2011

Civitas misleads on rail

Surprise, surprise. Brian Balfour at the conservative Civitas Institute has posted a misleading and mistake-filled column, supporting North Carolina House Bill 222, which would potentially turn back the federal rail improvement funds that are coming to the state.

Some of the misleading statements

The column begins by explaining that the proposed legislation "would prohibit North Carolina’s Department of Transportation from accepting any federal funds earmarked for high-speed rail without first getting the General Assembly’s approval."

Earmarked? No, the North Carolina rail grant was awarded through a competitive process; no earmarks were involved.

The column goes on,

Refusing federal funds for light-rail boondoggle projects would follow in the footsteps of Governors in Wisconsin, Florida and New Jersey who have refused federal funds for high-speed rail.

Light-rail boondoggle? The grant funds improvements to the primary passenger and freight rail corridor through North Carolina.

Next,

North Carolina doesn’t appear to be a very appropriate location for high speed rail lines. According to this analysis, Charlotte is the only NC city among the top 40 in the nation for populations within 10 to 25 miles of downtown – an indication that this area lacks population density in its urban areas sufficient to justify rail projects. The analysis further concludes that passenger rail for intercity travel would only be viable with additional regional investments (more state and local taxpayer dollars).

Balfour has taken some selective statements and fundamentally misrepresented the actual report, which not only rates the Charlotte-to-Raleigh rail link as one of the more promising in the country but also recommends exactly the types of incremental improvements that are being proposed. The rail links in and around Greensboro actually show up in the report as scoring in the top 10 percent of most of the review criteria for high speed improvements.

Next,

But many will still insist that NC would be foolish to pass up 'free' federal dollars to build high-speed rail lines because it would 'create jobs.' I pointed out previously, however, that such federal funds are not 'free,' and in fact hinder a state’s economic growth prospects. A Harvard study examined the impact of federal earmark spending in states and found that federal 'fiscal spending shocks appear to significantly dampen corporate sector investment activity.'

HB 422 is a good idea because accepting these federal funds would put NC taxpayers at risk for paying for the very likely cost overruns and the politically-motivated rail projects will divert scarce resources away from entrepreneurs and make the state’s economy worse off.

Balfour continues to describe the project in earmark terms (politically-motivated rail projects). He also describes a risk of over-runs but no evidence that these characterize this project.

On the bright side, if there is any leftover funding from the rail project, it might be used to straighten out Civitas' twisted statements.